All Forum Posts by: Scott Krone

@Mike Schorah - Why do you think he wants to invest in real estate?  It sounds like he has a great heart wanting people to succeed, and trying to help you earlier in your career.  It also appears his interest is in stocks.  Just because he has money doesn't mean he wants to invest in real estate.   Most 77 year olds are not looking for growth, they are looking for preservation and liquidity to live off.

I took a great course by Productive Strategies on FOCIS.  It is a program to better understand sales and marketing.  For instance, how many times have you gotten a call where the first thing you hear is, "I have got the perfect (insurance, CRM, accounting software, or other tool) for you."  The first thought that goes through my head is, "How can they possibly know what is perfect for my company when they don't know what my company does?"  I would be willing to bet the same is true for your uncle.  

You may have a great property, solution and strategy, but if it doesn't align with his goals it won't be a fit.  Perhaps spend Good Friday learning more about your uncle and understanding his investment strategies to determine if he has interest in real estate.  It may yield you better results than asking, "Do you want to make some money."  

@Rich Lavery -  @Paul Moore recently wrote a book published by Bigger Pockets on this topic.  He describes the various strategies of self storage and talks about the different operators who helped him learn about the asset class.  The book is called Storing Up Profits.

@Erik Johnson I am sure this will not be a popular response, or perhaps one you are immediately seeking. However, I would suggest that for most real estate classes, I would say wait. I believe we will see a market correction very shortly. Buying on this side of the correction will impact the yield you are seeking. True interest rates will be lower (everyone agrees the FED is going to be rising rates), but will also impact CAP rates and buying power. Once the market shock has passed, history has shown there will be many better buying opportunities.

As with life, there are some exemptions to the rule.  The best way to assess the exemption is via market stress tests.

@Khadija Imara - Welcome to the Toledo market!  A very good commercial real estate broker that has worked with us on multiple projects is Ryan Miller.

https://www.rkgcommercial.com/...

Prior to the '08/09 Crash, 1979 was the largest recession we had since WWII.  Interesting comparison.  Few things I have been noticing:

1.  There is a quite undertone voice recognizing the current economic climate which is pointing to a recession.

2.  There is a loud bold voice which does not want to recognize the current economic climate.

3.  I have been through all the recessession since '79/80, and the share common traits.

Interesting comparison I am using for a presentation next month.  The only reason we are not in a recession right now is how much money we have been printing.

@Gabriel Fairman - If your post answers one question it is this - you will get the full spectrum of responses when you post to BP!  

First, thank you for your service, and I agree your service time has taught you many wonderful skills that will translate to your career in real estate.

Second, you are astute to evaluate market conditions and look for better efficiencies.  There comes a time when an extensive rehab/remodel becomes more costly than a new construction home - hence why there are tear downs.  I have worked for a developer/been a developer since...let's just say a long time.  

A small development (6-10) homes can be challenging due to:

a.  finding an open site.

b.  entitlement costs (if applicable) can only be spread out over a smaller number of units.

c.  site development costs

Our smallest development was 12 townhomes on just under an acre.  @Matthew Paul makes some astute observations, however we did not have to sub-divide, install public sidewalks or even a road.  All those amentities were already there.  On every project that requires site work, we had a civil engineer and surveyor.  It just are required a new survey with legal descriptions for each townhome.  So the moral of the story is:  it can be both more simple and much more complex.  It will depend on the site and the municipality.  So, if you elect to proceed, I would suggest developing a team (architect and engineers) to assist you.

I believe there is a famous quote in the Hunt for the Red October along the lines of "The Russian navy doesn't take a sh***t without a plan, son".  I am pretty sure that applies to our navy as well!  The meaning - I am sure you will be will prepared before you proceed.  

If you have any questions, feel free to reach out.

@Gene Liang . Interesting you can build (2) homes on the property.  Where I would begin is determining if the property can every be sub-divided.  I would want to insure as much flexibility in the future.  The beginning place is to determine the exit place.  Will the property have to be sold with (2) single family residences, can the property be sub-divided and each home sold separately, can (1) one home be sold off and maintain the other.

To that end, I would make sure they had all their own utilities and connections.  The architect should be able to assist with answering those questions as well.

@Barry Ruby  - I apologize if my comment conveyed a shallow assessment of architects overall.  That was not my position.  I was attempting to discuss the differences of the industries by making the tasks symplistic.  There are many architects that have impressed me, more than a "few unicorns".  I was highighting the tasks necessary for an architect to move into the role of a developer.  

As an example, so as not to pick on architects. First time developers. My observation over 25 years, is first time developers on SFR make the home exactly the way they want it. Not what the market says it wants, what they want. As a result, the product tends to be over built and harder to sell. Good developers recognize the difference between their own preferences and what the market wants. When we were flipping homes, I would give my wife 2 or 3 choices (color of a counter, type of appliance). I was building for the market and not for our family. Did our family enjoy the home, yes. Was it exactly what we wanted no. We would live there for 1 to 2 years, and then sell it. When we decided to build our long term home, my wife choose everything. I built it for her, she was my "client", not the market. Two vastly different approaches.

@Jared W Smith - I certainly agree with his comments as well.  The benefit of having an architect as part of the team, is speed of implementation.

@Jason Coleman  You can retain consultants who specialize and advocate on your behalf to insure you get the correct amount covered.  You are smart to assume the carrier is looking to manage their exposure.  No different than auto or home, etc.

@Aaron Vanderpool  - Welcome to the dark side : )

When I was purusing my masters in architecture, I was the TA for a professor who was a developer, architect and GC so I got to experience all three roles while learning the craft.  Having also taught college architecture, I recognize the tension between being an architect or a developer.  Having worked in all three spaces for the past 30 + years, we have also worked with a variety of architects in the GC role so I hope my comments are helpful.

In essence there exists a tension between the three roles:  architect, developer and GC.  Simplistically, a developer's primary goal is to maximize revenue/value while controlling costs.  An architect's primary goal is to make the coolist building ever (I know I am being simplistic), and a GC's is to build the design while trying to manage the developer's budget.

In my opinion, the best architects are the ones that understand construction (not just design, but structure, MEP, and alternative buildings techinques) and can design within a budget.  For us, when I assess a property, I am looking at it from all three perspectives:  how to maximize revenue, how the design will impact the costs and what do we need to accomplish, and how will be actually build it.  Believe it or not, we have worked with many architects who have no understanding of how the structure impacts the MEP's, and provide no solutions as to how we can phyiscally build the building, or no understanding of details and how to address expansion and contraction of 4 different building materials when they intersect in one location (these examples are from very expensive architects).  The worst architects come up with elaborate plans which will never meet the clients goals, and have no understanding of how to build (IMO).

How to best add value to a developer, knowing the relationship between all three roles.  The better you understand the budgets, focus your designs to fulfill that, and come up with cost effective construction solutions, you will become incredibly valuable to a developer.  In essence the truist meaning of the word architect:  master builder.